UK: Consumers want interest free credit–can credit providers keep up?

By Puja Sharma

DivideBuy, the UK-based LendTech point of sale (POS) finance pioneer, has released the results of a new consumer insights survey, showing that 38% of UK consumers will make more use of interest-free credit options to manage their finances in the next 12 months.

However, with this change comes clear expectations from consumers about what they look for in a POS finance offer:

• 48% of people surveyed say they only look for interest-free products
• 31% of people say that the length of any interest free period was important to them
• 24% of people would be more likely to take out a finance agreement if they knew they were eligible upfront

The survey shows a profound shift in consumer thinking and ushers in the dawn of BNPL 2.0, with 86% of people concerned about the impact of inflation and the cost of living on their ability to purchase goods and services, while 45% of people expect to spend less on non-essential items (particularly eating out, clothing and holidays) in the next 12 months.

DivideBuy’s acquisition by Zopa, announced in February 2023, will also help it to bring to life BNPL 2.0, an evolution of BNPL that delivers the easy, integrated product customers love whilst also addressing industry issues around affordability and responsible lending.

Economic conditions are reshaping consumer spending expectations, and attitudes toward POS finance are softening. The user demographic for consumer credit is changing, with uptake by more affluent buyers on the rise.

The firm’s stats reflect an evolving user base for credit. 45% of customers are over 40, while 38% of customers earn over £30k per annum. Consumer credit is still a must-have for many, but for a growing number of UK shoppers, the option to keep hold of their cash for longer is becoming a competitive incentive.

So what does this mean for POS finance providers and merchants? The numbers speak for themselves: customers expect a seamless UX, interest free options, flexible payments, and zero late fees. The days of filling out long application forms, cumbersome checkout journeys, and lagging wait times are over. And credit providers must work together with merchants to deliver for their customers, or risk being left behind.

Interest free POS finance is the fastest-growing payment method in the world today, accounting for 2.9% of global eCommerce transaction value in 2021 and is projected to account for a 5.3% share of the market by 2025. With shifting attitudes broadening the appeal of POS finance to consumers across all income brackets, FCA-regulated DivideBuy is committed to bringing fair, ethical, and transparent POS credit solutions to consumers and merchants across all sectors.

Key Takeaways

• DivideBuy’s survey shows the rising cost of living and soaring inflation are driving growing consumer awareness of interest free POS finance solutions and demonstrates the future of BNPL 2.0
• Survey results come at a time when interest free POS finance is the fastest-growing payment method in the world
• Recently acquired by Zopa, DivideBuy is leading the drive to educate consumers and businesses about differences in POS finance solutions, and affirms its commitment to providing ethical, transparent, and flexible finance